Spousal support is one of the more contentious issues when couples are separating. This article is only a small window into the world of spousal/partner support.

 

Whether you are married, or unmarried and living within an Adult Interdependent Partnership (AIP), spousal support may become a factor in your legal proceedings. There are many myths about spousal support, and important legal concepts are often misunderstood. Before coming to an agreement concerning spousal support, we must first consider entitlement before we look at the quantum and or duration of spousal support. Many people mistakenly compare incomes to begin this analysis. Entitlement is not determined based on a disparity of income. Income does enter the analysis when considering quantum and duration. The first stage of entitlement however is based on the historical facts of the relationship and the roles taken by the spouses or partners.

 

If you are married, we typically use the phrase “spousal support.” If you are unmarried, and within an AIP, we typically use the phrase “partner support” short for Adult Interdependent Partner Support. Using one phrase over the other generally denotes the status of the relationship. This article will review entitlement and the two main types of spousal support. Entitlement to spousal support is based on four objectives found within the Divorce Act, section 15.2(6). Entitlement to partner support is based on similar factors found within the Alberta Family Law Act, section 60. The Divorce Act is used only for married spouses. The Family Law Act is used for non-married partners or AIPs. These objectives are summarized as follows:

 

  1. To recognize any economic advantage or disadvantage to the spouse/partner arising from the marriage/relationship or its breakdown;
  2. To distribute any financial consequence between the spouses/partners arising from the care of any child of the relationship over and above any obligation to pay child support;
  3. To relieve any economic hardship of a spouse/partner arising from the breakdown of the marriage; and
  4. To promote economic self-sufficiency of each spouse/partner within a reasonable period of time.

 

Spousal support or partner support (“support”) focuses on the economic disadvantage suffered by one spouse/partner and or whether or not the other spouse/partner gained a collateral advantage either directly or indirectly. A person does not have to suffer economic harm to be entitled to support. Entitlement may be founded if the higher earning spouse/partner gained an economic benefit. The two main types of spousal support are non-compensatory and compensatory spousal support.

 

Non-compensatory spousal/partner support:

 

This is often referred to as “means and needs” based support. One spouse has an immediate need for support upon separation and the other spouse has the corresponding means to pay it. The expenses taken for granted, such as basic everyday expenses, are unattainable by one spouse. For example, a stay-at-home parent without independent income cannot afford to pay rent, utilities, and buy groceries to meet their own basic needs. Non-compensatory support is generally short-term and encourages the recipient to work towards economic self-sufficiency. This will be fact dependant. While one spouse will argue their version, and the other spouse will argue their version, there are some undisputable facts that will likely be recognized. These undisputed facts are “what” has occurred, as opposed to “why” they happened. The Court is unlikely to consider what a party could have done differntly, but rather what a party did do throughout the relationship. Long-term marriages will often create longer needs based claims and there are those who may never become economically self-sufficient.

 

The Court can also consider the overall standard of living achieved during the length of the relationship. This means that non-compensatory support may be available beyond basic needs because it is meant to provide economic certainty and stability for the spouse to arrange economic self-sufficiency. Traditional relationships, where one spouse was a stay-at-home spouse, will often be entitled to non-compensatory support on an immediate basis.

 

Compensatory spousal/partner support:

 

Compensatory support is designed to address contributions made by a spouse during the relationship. Compensatory support will focus on the role of each spouse during the relationship. If a spouse’s education or employment was interrupted so that they could assume the main parenting role and homemaker, compensatory support will seek to balance the relative economics between the parties. Even when a spouse returns to work full time, but their time away has created an economic disadvantage, compensatory support is often payable to recover the economic losses experienced.  

 

The analysis will focus on what advantages were gained by the working spouse as a result of the non-working spouse’s contributions to the relationship. Compensatory support may be awarded where the disadvantaged spouse:

 

  1. Removed themselves from professional training;
  2. Stopped working or limited their work to take care of the spouse, child, and home;
  3. Supported the working spouse’s education, training, or career path; and or
  4. Moved to support the working spouse’s career.

 

When parties cannot reach an agreement, we often see an argument on entitlement. This is unfortunately true even in long term traditional relationships. Many payors mount strong defences once a support claim surfaces. Rather than focusing on what occurred over the course of the relationship, the payor focuses on why they occurred. While understandable, this is generally ineffective. This response only creates more stress, bitterness, and legal fees. Be sure you speak with an experienced lawyer before entrenching your position. Some facts will clearly establish entitlement and disputing the same may cost you a lot of money and decrease the chances of forging a cooperative relationship with your former spouse/partner. When entitlement is obvious, spouses ought to look at establishing a reasonable quantum (monthly amount) and duration (how many months/years) rather than leaving it up to a Court to decide.  

 

 

Is there an advantage to paying spousal/partner support?

 

Spousal/Partner support is tax-deductible for the payor and taxable to the recipient. The payor will receive a tax deduction based on the amount of support paid within a fiscal year. The recipient will pay taxes owed on the amount of spousal support received during that fiscal year. This is not a dollar-to-dollar value. The payor’s tax deduction can at times be more beneficial than the taxes paid by the receiving spouse.  This will depend on the incomes of the parties. Tax deductions are based on the guideline income minus the spousal support you will pay or have paid. This is an issue to discuss with your accountant.

 

The recipient must declare spousal/partner support as income and pay personal tax based on the amount received in that year. If the recipient is working and received spousal/partner support, the support income is added to their employment income for tax purposes. Before accepting a given amount of support, a recipient may want to discuss matters with their accountant as the amount of support may put them in a different tax bracket which will impact their net income.  

 

It is important to speak to an experienced lawyer about spousal/partner support. Receiving the correct information and guidance is a vital step and may alleviate stress, substantially reduce legal fees, and remove the battleground mentality. Grey Wowk Spencer LLP have experienced family lawyers who will provide the information you need to ensure quality service with sound advice to guide you through your separation.